This vest-pocket city is the best place to be for hip shops, superb restaurants, and star sightings galore

The police cars in West Hollywood say a lot about the city. Such vehicles, as a rule, sport no-nonsense authoritarian emblems, but here they are emblazed with a colorful rainbow—the symbol of the gay-rights movement. Weho, as the city is nicknamed, has lots of gays: more than one third of the population by official estimates. And that cultural identity has a palpable presence on the city's streets.

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West Hollywood's reputation for social tolerance developed long before it became a haven for the gay community. Like so many areas in greater Los Angeles, it was shaped by the movie business and came of age in the 1920s, when the thriving motion-picture industry supplanted railways at the top of the economic food chain. As the studios moved in, the neighborhood (it didn't become its own city until 1984) blossomed into a fashionable—and hedonistic—place to play. Swank hotels and restaurants proliferated along a stretch of Sunset Boulevard that came to be known as the Sunset Strip, and the silver-screen beau monde—Clark Gable, Lana Turner, Marilyn Monroe, and many more—flocked to such celebrated nightclubs as Ciro's and the Mocambo.

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The face of West Hollywood changed dramatically in the '60s, when a burgeoning music scene attracted a wealth of talented performers and their hippie followers. Locals communed with Joni Mitchell and Carole King at the Troubadour and dropped acid with Jim Morrison and Janis Joplin at Whisky a Go Go. Those clubs are still hopping today, and if you hit the Troubadour on the right night, you might be fortunate enough to catch Joni. In the '70s, waves of gay and lesbian settlers transformed Weho's civic identity into a mecca of homosexual culture and political activism.

Those multiple histories still define the city's idiosyncratic character. The entertainment industry continues to party in Weho, hotels and shopping are as top-drawer as ever, and live music remains a nightlife mainstay. But for tourists, West Hollywood's greatest asset is its central location. Important cultural institutions and scenes of natural splendor are few and far between within the 1.9-square-mile city limits, but museums, beaches, mountains, and movie studios are all close by. Better yet, everything within Weho is easily accessed on foot. As textile designer Lulu de Kwiatkowski says, "You can get out of your car and walk and enjoy lots of sidewalk cafés. It's very Parisian that way."

For daytime divertissement, the local specialty is shopping, particularly in the arena of home design. An astonishing array of well-stocked boutiques and showrooms spreads out along La Cienega Boulevard and Melrose Avenue. Whatever you're in the market for—gilded altarpiece, Shaker chest, decorative dinosaur bone—you're sure to find it somewhere in Weho. Influential L.A. decorators, among them Rose Tarlow, Peter Dunham, Gary Gibson, and Suzanne Rheinstein, bring their distinctive sensibilities to life in highly personal shops. "One of my favorite places is Henry Beguelin, right next to the Pacific Design Center, which has wonderful leather boxes with chunky stone inlay," says interior decorator Schuyler Samperton. The selection of shops selling cutting-edge fashion is just as exciting, from Fred Segal to Maxfield to Alexander McQueen to Phillip Lim.

The best lodgings here fall into the boutique category. The grande dame is Chateau Marmont. Built in 1927 and modeled after a Loire Valley castle, it is now owned by hip hotel entrepreneur André Balazs. Few establishments can boast such a colorful history—or such legendary adherence to discretion. As Harry Cohn, founder of Columbia Pictures, once advised carousing actors William Holden and Glenn Ford, "If you must get into trouble, do it at the Chateau Marmont." And the hotel's garden restaurant is a sure bet for celebrity spotting. Even finer star sightings can be found at Sunset Tower Hotel. Sensationally restored by hotelier Jeff Klein, this totemic Art Deco skyscraper is where Vanity Fair set its ultraglam 2009 Oscar Night party.

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Across the street from the Chateau are other stalwarts of Weho hospitality: the Standard, also a Balazs property; and the Mondrian, recently rejuvenated by designer Benjamin Noriega-Ortiz. The London West Hollywood rolled into town in 2008, with its tempting David Collins interiors and Gordon Ramsay restaurant. The Chamberlain also uses design as a calling card, courtesy of David McCauley, protégé of style queen Kelly Wearstler. And early this year, the fabled yet faded Continental Hyatt House on Sunset—known to rowdy rock stars as the Riot House—emerged from an extensive renovation with a fresh look by Janson Goldstein and a new name: Andaz West Hollywood (Hyatt launched the Andaz brand in 2007).

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When it comes to gastronomic indulgence, Weho has some of the best eats in town. The latest sensation is chef Michael Mina's XIV, a sophisticated joint with an emphasis on tasting-size portions; Philippe Starck designed it as an 18th-century European castle reinterpreted for the new millennium. And Suzanne Goin, a much-lauded local chef, consistently draws raves from finicky foodies for the innovative cuisine and civilized atmosphere at Lucques.

Two restaurants on La Cienega Boulevard trace the arc of chef Nobu Matsuhisa's career: Matsuhisa, just south of Weho, where it all began, and a new Nobu, which opened last year. Adventurous sushi lovers unconcerned with decor should also try Wa Sushi & Bistro, an insider's favorite hidden on the second floor of a dull strip mall. And then there's Real Food Daily, a sassy little organic-vegan spot where Nicole Richie, Drew Barrymore, and other young things tuck into tempeh enchiladas with melted cashew cheese and tofu-based chocolate pudding.

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Diners in search of prime Weho atmosphere, however, should plan to spend an afternoon at Hamlet, where golden-age stars like Mitzi Gaynor are regulars and the hostess is an ex-wife of jazz legend Miles Davis (and might tell you all about him if you're lucky). And don't miss Dan Tana's, a landmark eatery for more than four decades. With its lively mix of Hollywood potentates and fresh-faced ingenues, the scene at Dan Tana's captures the essence of Weho. This collision of cultures and generations gives the city its energy and spirit. Gay, straight, high, low, old, young—it's all good in West Hollywood.

Rock out. Take in the clubs and bars along the Sunset Strip (Sunset Blvd. between Cory Ave. and Havenhurst Dr.) where rock 'n' roll history unfolded.

Meet the locals. Santa Monica Blvd. is the main artery of business and social life in Weho, which is a highly walkable 1.9-square-mile city. The street scene percolates at night.

Drive smart. Sunset Blvd. traffic can be brutal, so heed the words of Bette Davis. When Johnny Carson asked if the star had any advice for young actors, she said, "Take Fountain!" (a celebrated shortcut).

WHAT TO SEE

Pacific Design Center, 8687 Melrose Ave., 310-657-0800; thepacificdesigncenter.com: Get an up-close look at starchitect Cesar Pelli's dramatic glass complex, a.k.a. the Blue Whale, home of top trade-only fabric and furniture showrooms—then see what's new at the Museum of Contemporary Art's PDC satellite.

Schindler House, 835 N. Kings Rd., 323-651-1510; makcenter.org: Explore one of the great landmarks of early modernist architecture, a multifamily home built in 1922 by and for one of the era's most distinguished architects, R. M. Schindler.

WHERE TO STAY

Andaz West Hollywood, 8401 Sunset Blvd., 323-656-1234; westhollywood.hyatt.com: This sleek modern hotel is a recent reincarnation of the legendary Riot House.

Chamberlain, 1000 Westmount Dr., 310-657-7400; chamberlainwesthollywood.com: The eye-popping design will blow you away with its kaleidoscope of period references and bold graphic gestures.